Citizens Advice calls for suppliers to be set annual targets to get consumers off default tariffs by 2020

New analysis reveals energy bills have risen by 3 times the rate of inflation in the last year

Citizens Advice is today calling for energy suppliers to be set annual targets for getting their customers off expensive default tariffs over the next three years – in addition to an immediate cap on energy bills for the poorest households.

New analysis from the national charity also finds the average dual fuel energy bill for customers on the largest six energy firms’ standard variable tariffs has risen by £89 over the last year.

Standard variable tariffs (SVTs) are the most common form of default tariff for consumers – meaning they pay for their gas and electricity without having a fixed term deal with their provider.

As many as 12 million people in Great Britain are on SVTs, often being automatically rolled onto them by their supplier when a fixed deal comes to an end. SVTs can be hundreds of pounds more expensive than fixed deals and are subject to regular changes in price.

Over the last year all of the six largest energy firms raised the prices of their SVTs. Citizens Advice has calculated that energy prices have risen on average at a rate of 8.3% in the last year for SVT customers of the largest firms – three times the rate of inflation, which is currently 2.6%.

Separate analysis from the national charity also finds it is often poorer pensioners and disabled people, and low income families, who are worst affected by these price rises, spending a much greater proportion of their income on gas and electricity – 11.1% compared to 5.2% among other households.

Citizens Advice has calculated that if price rises were to continue at the same rate as they have over the last year consumers would end up being £185 worse off over the two years to September 2018.

Victoria MacGregor, Director of Energy at Citizens Advice, said:

“Gas and electricity bills have skyrocketed for loyal customers over the last year.

“One large energy supplier after another has hiked up the prices of already expensive default tariffs – putting huge additional pressure on people who are struggling to meet everyday costs.

“It is the poorest pensioners and families on standard variable tariffs who can least afford these price rises – and they continue to lose out whilst debate about how to cap costs continues.

“In the first instance Ofgem must limit rising bills for the poorest energy customers by capping costs for all those eligible for the Warm Home Discount.

“But energy firms can’t be let off the hook from helping all loyal customers. Suppliers should be set annual targets for getting their customers off default tariffs, backed up with a hard deadline, so that by 2020 anyone who has been on the same rolling tariff for 3 years would be protected by the cap too.”

Energy supplier E.ON last month (21 September) announced that it will replace its SVT with a rolling, one-year fixed term default tariff – a move Citizens Advice said was a “positive sign” whilst warning it must not become “a situation of one bad deal replacing another”.